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Jersey Unreported Judgments |
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Representation of Ocorian Private Trustees (Jersey) Limited and Ocorian Limited Re T Trust [2024] JRC 015 (18 January 2024) URL: http://www.bailii.org/je/cases/UR/2024/2024_015.html Cite as: [2024] JRC 015, [2024] JRC 15 |
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Before : |
Sir William Bailhache, Commissioner, and Jurats Ronge and Austin-Vautier |
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Between |
Ocorian Private Trustees (Jersey) Ltd |
Representors |
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And |
Ocorian Limited |
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And |
(1) B |
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(2) C |
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(3) D |
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(4) E |
Respondents |
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Advocate Mark Renouf, Guardian Ad Litem for the Minor and Unborn Beneficiaries, and any who might be or might have been beneficiary through their employment by Company A, or as dependants of such persons |
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IN THE MATTER OF THE REPRESENTATION OF OCORIAN PRIVATE TRUSTEES (JERSEY) LIMITED AND OCORIAN LIMITED
AND IN THE MATTER OF THE Y TRUST, THE W TRUST, THE V TRUST AND THE U TRUST
AND IN THE MATTER OF ARTICLES 47, 51 AND 53 OF THE TRUSTS (JERSEY) LAW 1984 (AS AMENDED)
Advocate N. M. C. Santos-Costa for the Representors.
Advocate D. Le Maistre for the First Respondent.
The Second Respondent in person.
Advocate H. B. Mistry for the Third Respondent.
Advocate S. C. Thomas for the Fourth Respondent.
Advocate M. P. Renouf in person as Fifth Respondent.
judgment
the commissioner:
1. On 2 June 2023, the Court handed down an interim judgment (the "June judgment") in respect of the application by the Representors (the "Trustees") for the Court's approval or blessing of what had then come to be described (erroneously) as the final distribution plan by which the assets of four T trusts would be appointed out of those trusts among the first four Respondents, with an additional provision for the divorced second wife of the Settlor who would be added to (the "Y Trust") solely for the purpose of receiving a benefit of £200,000, and would thereafter be excluded. By the June judgment, the Court refused to approve or bless the final distribution plan put before us, and it was made plain to us then by Advocate Santos-Costa that the Trustees would return to Court later in the year with a further distribution plan for the Court's consideration. In this judgment, we adopt the facts and matters set out in the June judgment, except where stated; and for convenience and because this was the approach taken in submissions, we refer to the Settlor's children by their first names, without, we hope, any disrespect to them. The Trustees have now reapplied to court and that plan (in this judgment called the "Distribution Plan") was presented to us for consideration at a hearing on 17 and 18 November. It has always been plain to Advocate Renouf as Fifth Respondent that the employees and former employers of "Company A" and their dependants were unlikely ever to receive benefit from these [T] trusts and accordingly, as he rightly has taken the view on behalf of the minor and unborn beneficiaries of the Settlor's children that it is in their best interests that the assets within the Trusts be fully distributed, there is little that he can or should add to the contentions which the putative parents of those he represents might advance.
2. The Distribution Plan is not agreed by all the beneficiaries although elements of it are. However, the Distribution Plan is in some respects a good deal clearer than the final distribution plan which came before the Court for consideration in May.
3. Paragraphs 16 to 30 of the June judgment dealt with what has been described as the French write off. It is unnecessary to repeat all we said then, but the question remains contentious in the current proceedings and we deal with it below.
4. The Distribution Plan was accompanied by a steps plan, which is to say a plan setting out not only what was needed to be done in order to wind up these four Trusts and distribute all the assets, but also the order in which those actions should take place. For reasons set out in detail below, one of the steps which needs to be taken is the realisation of ("Property 1"). Until that is sold, with money coming into (the "W Trust") in order to enable loans to be repaid and elsewhere distributed, the Distribution Plan cannot go forward. It is an essential step and it has also proved to be the source of some contention. That is dealt with below in detail.
5. The third area of contention concerns the question of costs. This was raised in passing at paragraphs 34 to 36 of the June judgment. There has been further argument about costs, not just in respect of what might be thought of as wasted costs of the May hearing, but also the management and legal costs generally (including quantum) since the date of death of the Settlor. For the time being, on Alhamrani principles, the Trustees have been discharging their various costs from the Trust funds and as any approval of the Distribution Plan would necessarily involve an approval of the Trustees' management and legal costs in principle, if not in quantum, the costs issue is live and is not straightforward.
6. We have been extremely troubled with the delay which has taken place in making what really seems to have been, in some respects, little progress, although there is now a much greater focus than there was six months or so ago. However, for the reasons which we give below, we are unable to bless the Distribution Plan. Whether, as a result of this judgment, the Trustees are able to agree the necessary outstanding matters with the beneficiaries and obviate a return to Court is a matter for them all to consider. This judgment may or may not, therefore, be the last in the series. It is of course obvious that the Trustees are not obliged to seek a blessing of the Distribution Plan if further amended, although we certainly would not discourage them from seeking such approval.
7. As one positive development since the May hearing, there has been progress in relation to the Settlor's estate. The detail of this was covered in paragraph 6 of the June judgment. At all events, ("C") does now have the benefit of indemnities in relation to her work as executrix of that estate, and we understand that the net estate is in the course of being transferred, if it has not already been now transferred, to the Trustees as trustees of the Y Trust. As that transfer was fundamental to the final distribution plan, the Court considered in May that we could not endorse that plan unless confident that the residuary estate would be transferred. We do now have confidence in that respect.
8. We should also record that the Court ordered at the close of the hearing in November that the final vesting date should be delayed until 30 September 2024, with liberty to apply. It is clear that the postponement of the vesting date is in the interests of the beneficiaries because the ultimate distribution arrangements will take time to put in place and an early vesting would, in the case of ("B") at least, have very significant tax disadvantages.
9. We have reminded ourselves of the legal test which applies to the Court's approach to a blessing application of this kind. As we indicated in our June judgment, the Court has followed the established line of authority in relation to blessing applications - Re S Settlement [2001] JRC 154, Re Otto Poon Trust [2015] JCA 109 and Re HSBC Trustees (CI) Limited [2023] JRC 006. In particular, we accept that the Trustees have formed their opinion in good faith; we consider that there was no conflict or potential conflict of interest which the Trustees had to consider in preparing the Distribution Plan, save in one respect (costs) to which we will return later. However, in respect of the French write off, we do not think that the Trustees' decision falls within the band of reasonable decisions for the reasons which we shall give. We also have had reservations about, and make some comments upon, the question of Property 1.
10. The facts in this connection are set out at paragraphs 19 to 24 of the June judgment and we see no purpose in repeating them. We add some further comments following the hearing in November. However, the Court has gone back over all the documents which have been presented to us and it is appropriate to emphasise some points that have arisen on them.
11. We start with the Trustees' approach to the French write off. When the property was sold in or about 2013, the sale price reflected a loss of £945,842. The net proceeds of sale were ultimately paid by the purchasers to C reflecting her 99% shareholding in the company which owned the property. Those net proceeds of sale have been treated as a benefit to C for the purposes of the equalisation process which has been undertaken. As to the loss, the original approach taken by the Trustees in their bookkeeping arrangements was to write off the loss in its entirety; in other words, the balance of the loan over and above the net sale proceeds which were received by C, that balance reflecting the loss on the sale, was written off - hence, in shorthand, called the French write off.
12. Subsequently, in the context of the possibility of winding up the Trusts and distributing the assets, the Trustees have tried to achieve an equalisation of benefit in accordance with the very clear wishes of the Settlor. The last occasion on which such an equalisation was attempted was 2004, but since then different advances, whether by appointment or loan, have been made by the Trustees to the Settlor's children, and gifts, sometimes substantial in amount, were also given to each of them by the Settlor, their father. The equalisation process will have the result that the first four Respondents receive a markedly different amount from each other in the course of the Distribution Plan, albeit, over the decades, they will have received an equal amount.
13. Thus the treatment of the French write off within the equalisation plan is of primary importance.
14. Regrettably, the Trustees have approached this in a very inconsistent manner, albeit the first change of direction came as a result of information as to ("Country 1") succession law. In circulating the initial distribution plan, the Trustees were unaware that under Country 1 succession law the French write off would constitute a gift which could be brought back into account if one or more of the Settlor's children were to claim their forced heirship rights in Country 1. Whether or not this was a question which the Trustees ought to have considered before drawing up the initial distribution plan is not before us now. Nonetheless it remains a fact that on 2 April 2008, officers of the Trustees, also then officers of Windsor Trust and Developments Limited, wrote off the balance of the loans which had been made to C and ("P") for the original acquisition of the French property and for improvements to it. Lindsay Cox, on behalf of the Trustees, deposed in her first affidavit ("Cox 1") to her belief that the Settlor was aware of the French write off. The practical point for the purposes of the equalisation process is that in their first approach, the Trustees did not bring the French write off into account at all with the result that the available assets for distribution were reduced by the amount of that write off.
15. The next stage in the Trustees' thinking was the circulation of the revised distribution plan dated 10 October 2022, which was apparently circulated to C after the Representation was filed with the Royal Court. The revised distribution plan significantly reduced the proposed distribution to C, a variance of over £1 million, said to be justified by the decision to treat the French write off as a past financial benefit for C. On receiving C's comments on that approach, the Trustees filed an affidavit accepting that they had been wrong to reduce her proposed distributions by reference to the French write off. However, the figures which appeared in the final distribution plan were not entirely consistent with the principles which C thought had been conceded.
16. At all events, then, the approach in the initial distribution plan (write off of loan) changed with the revised distribution plan (which largely attributed the French write off to C) and changed again in the final distribution plan with the consequence that under that plan the four siblings each carried 25% of the write off. As indicated in the June judgment, the Court considered that that was irrational, not because there had been a change of heart on the part of the Trustees as such, but because it was entirely unclear why ("B") and ("E") should pick up any responsibility for the French write off. As we said at paragraph 21 of the June judgment, the beneficial ownership lay uncertainly between C and D, and we did not at that time adjudicate on the appropriate percentage share. What we did make clear at that hearing however was that there was no basis upon which B and E should have to pick up any of the loss sustained by the French write off.
17. Reverting then to the Distribution Plan put to us in November, the Trustees have now gone back to a position where C carried the loss in its entirety. As Lindsay Cox deposed in her fifth affidavit ("Cox 5"):
"The Court indicated that it was not minded to bless the Trustees' decision to adopt the final distribution plan, as it considered the manner in which the French property was proposed to be dealt with to be unreasonable, the Trustees having decided, in principle, to 'write off' the loss realised on the sale of the French property. The Royal Court indicated that it considered such treatment to be to the detriment of both [B] and [E], as, whilst the French property was purchased using Trust monies, it was held outside the [T] Trusts, and had any profit been realised on sale, this would most likely have been retained by [C] and / or [D]."
18. The Trustees having indicated in discussions with the beneficiaries after the June judgment that the allocation of benefit would reflect the loans which had been taken out by C and D respectively, C expressed the view to them through her counsel that at least 80% of the French property loans ought to be attributed to D.
19. The Trustees clearly did not consider this was appropriate and concluded that the loans should be attributed by way of benefit to each of C and D in the amounts in which they were reflected on the papers, regardless of the way in which the investment in the French property originally came about, why it was so structured and for whose benefit overall it was intended to be held. The face value of the loans would be used to calculate the respective benefits of each of them.
20. In brief therefore, the Trustees' position in relation to the French write off has moved in the following ways:
(i) under the initial distribution plan, it was not brought back into the calculations at all;
(ii) under the revised distribution plan, it was brought back into the calculations and the loans attributed at face value to each of C and D;
(iii) under the final distribution plan, the write off was brought back into the benefit calculations but was split equally between the four siblings. This was rejected by the Royal Court as unreasonable in our June judgment; and
(iv) in the Distribution Plan presented in November, the Trustees have reverted to the revised distribution plan approach and allocated the loans at face value as benefits enjoyed by C and D respectively.
21. In his forceful closing submissions to us, Advocate Santos-Costa asserted that the Trustees' decision as set out in the Distribution Plan presented in November fell within the band of reasonable decisions. C had found the property; had made an offer for it; had paid for it; had arranged to sell it; had the beneficial ownership of 99% of it; took the proceeds of sale; would have taken the profit if there had been one; and had the benefit of the tax losses. Thus, he submitted, the Trustees' decision was reasonable.
22. Those submissions were in his view supported by the contractual and legal position. We say immediately that we think it is unclear whether the C would have taken the profit if there had been one. In her address to us in November, she said she would have shared it with D. As there was no profit to be taken, it is impossible to be certain which of the Trustees or C is right in their submissions as to who would have had it, had there been one, but our view of the correspondence, as we shall see, is that it would have been split between C and D.
23. This approach of the Trustees was also largely reflected in the approach which Advocate Mistry took on behalf of D. He submitted we should concentrate on the commercial agreements which were in place and not on any personal agreement between C and D.
24. As we concluded in our June judgment, there was no dispute that if the French property had been sold for a profit that profit would have been taken by C and possibly D. The French property was not a Trust asset. The Trust assets were the loans which each of C and D received in respect of the French property and, those loans being written off, the issue in the equalisation process is whether that write off should be on the basis of the face value attributed to each beneficiary, or whether, as between the two of them, the loans should be shared in a different proportion.
25. In our judgment, in calculating benefit, which is necessary for the purposes of equalisation, the Trustees should not look at the narrow legal position but should look at all the circumstances which reflect the reality of what has taken place. Accordingly, we think they are wrong in principle in the Distribution Plan put before us in November to allocate the entirety of the French write off to C and to D respectively in the face value of the loans which they received. It is in our judgment telling that the account which C has given the Court of the arrangements which led to the acquisition of the French property has not been disputed in any material sense.
26. C sets the situation out in her first affidavit. In summary, she and D were in discussions with the Trustees in connection with their joint proposal to move from ("Country 2") to Europe. The main reason for that move was that D's Country 2 immigration status had expired with the result that she would not be able to return if she left that country; and the consequence would be an inability to travel for equestrian competitions which were at that time an extremely important aspiration for her. The plan was that as D and C were close, practically and emotionally, they would share the same accommodation; and they needed a property that would suit D's circumstances - she had to move eighteen horses including two miniature ponies, at least seventy cats and ten dogs from Country 2 to Europe. The quality of the pasture land was an important consideration and the location needed to be one from which it would be easy for D to travel to and from equestrian competitions. The UK's quarantine restrictions were a disincentive to move there. As a result the French property was acquired, albeit with the benefit of a loan from the Trustees. It was in Normandy where it was thought there was the best opportunity to develop further D's competitive showjumping potential, generate positive income from livery and create long-term capital appreciation. Part of the commercial rationale was that in addition to the equestrian commercial activity, income could be generated through the rental of six gites for which C would take responsibility. The particular property which was acquired was therefore considered appropriate to allow D to continue to pursue her riding career and generate income which she could eventually use to support herself and her lifestyle. As C put it in her first affidavit:
"The French property was absolutely not a property that I would have chosen for myself or for my own lifestyle. I do not have any particular interest in horse riding or competing, or indeed in living in Normandy or France."
27. The French property was in fact purchased through a corporate structure which was 99% owned by C; but in her first affidavit C asserted that if the French property had been sold at a gain, she, D and the Trustees would all have expected that gain or profit to be shared between herself and D on an equal basis, or indeed possibly with D taking more than 50% given her prominent role in the business and equestrian knowledge.
28. As Mrs Cox, on behalf of the Trustees, set out in Cox 5, the Trustees' position is that:
(a) European property was sought in furtherance of D's ambitions to compete in equestrian events. C was charged with finding a suitable property, and she proposed that the particular French property should be purchased. She thought the price was fair and she said that she would run the gites and do the accounting for the employees and run the livery business to enable D to compete and raise her profile;
(b) accordingly, the French property was therefore purchased for D and C to run as a business. Originally it was intended that the French property should be held within the ("T Trusts") but tax advice was against this, and it was for that reason that the corporate structure was adopted as it was. The Trustees' understanding was that C was the majority shareholder only because D had a potential Country 2 tax liability; and
(c) it was correct that the Trustees asked their accountant, who did the bookkeeping for the Windsor companies, to assist C and D with the bookkeeping and accounting for the French property, which he did. It was correct that the Trustees requested D to take responsibility for the horses and stables, including the maintenance and upkeep of the fields. From April 2007, the Trustees paid D a monthly allowance of some 10,000 euros more than they paid C. This reflected their contributions towards the expenses of running the French property.
In other words the Trustees' evidence suggests a joint venture, even if for bookkeeping purposes the commercial arrangements showed loans to C and to D respectively.
29. It is of interest that in a document which C asserts was sent by the Trustees to her in 2014, the Trustees, calculating the beneficiaries' capital entitlement received at that date, showed the write off of the French loans as being equally attributable to D and C.
30. It is also of interest to note that contents of a file note of the Trustees in November 2007, recording a conference call with members of the board of Trustees. In terms of cashflow, Mr Clifford is recorded as saying that the value of funds received by D and C on a monthly basis was quite high; to which Mr Prosser, a co-trustee, said that the funds were for the French property but could not be paid to the French company directly, and that the difference reflected the funds required for D's horses and the split of responsibility for the various areas of the property. Commenting on the value of the property, Mr Prosser said "This has not been a successful investment for the Trustees".
31. On 11 April 2007, Mr Prosser had emailed D. In that email he said this:
"As you will be aware, the Trustees have been trying to help you realise your riding ambitions and as a result took to the decision to invest a considerable amount of money in the French property. This was on the understanding that the Trust would provide some financial support in the short-term to enable you and [C] to establish yourselves in France and to make a going concern of the French property so that it could become almost self-supporting. Nevertheless the Trustees also agreed to provide a sum of 250,000 euros in the first year and 150,000 euros for the subsequent year and possibly the same amount thereafter. This presupposed that in due course the stables would be occupied by feepaying clients and the gites would be occupied for a substantial part of the year. Once this was established, it would enable you to undertake your competitive riding whilst at the same time providing you with an income from the property.
What has become clear over the last fifteen months is the property is just too big for you and [C] to manage without the Trust supporting you to the extent of over 500,000 euros each year. This is only in relation to the running costs and takes no account of your capital wish list such as outdoor ring, new fencing, property building programme and renovation... It was therefore decided that the best solution would be to downsize the property so that it was of a more manageable size which could be maintained by you with less support from the Trustees. With [C's] help we have therefore asked a number of property agents to visit the property with a view to marketing the property and to suggest an asking price..."
32. In other words, although the French property did not belong to the Trust, it was treated as a Trust investment by the loans made to each of C and D.
33. We have also had regard to a meeting note between C and the Trustees on 9 November 2005. That Trustee note clearly indicates that the Trustees viewed the acquisition of the French property as a joint venture between D and C, and also that there were concerns about D's Country 2 tax position, although none expressed in relation to C.
34. Since the hearing in November, we have conducted a very full review of the documents which were put before us. In our judgment, there is no doubt at all that the Trustees correctly identify in Cox 5 that this was a joint venture between C and D. As Trustees they tried to help the two of them, by providing their accountant to assist in bookkeeping arrangements and by making loans available to enable the property to be acquired and to be maintained and run as a business. In those circumstances, it seems to us in equity to be outside the band of reasonable trustee decisions to treat the entirety of the loans advanced by the Trustees to C as being for her benefit. It is clear that whatever the cause of its breakdown, the whole arrangement was not for C's benefit alone and we think that the Trustees are wrong in principle in disregarding the real nature of the transaction when making what is said to be a fair assessment of benefits received by having regard only to the contractual documentation. It was obviously wrong in May that E and B should share some of the losses from the French write off, which had nothing to do with them. It is equally obviously wrong that C should be expected to carry the entirety of the French losses in respect of what was a joint venture between her and D.
35. As a result the treatment of the French write off in the Distribution Plan is wrong in principle. It is clear to us that it should be apportioned between C and D. This was not solely a contractual arrangement. If it were, then i) the Trustees would not have written off the deficit completely in the initial distribution plan; ii) the Trustees would not have come to Court in May with submissions that this was a trust investment and a proposed split of the write off in 25% shares between the four siblings, and iii) would not have consistently reflected the acquisition in correspondence as a joint venture.
36. If we were making the apportionment of the French write offs in respect of the C and D loans, we would do so by aggregating the loans and apportioning the write off in equal shares. We recognise that there might have been some mileage in C's claim that she should bear less than 50% of the loss, but she has sensibly accepted a 50/50 split in her submissions to us. Theoretically, it is for the Trustees to make the apportionment which they think is right. Making no apportionment is wrong in principle. On all we have seen, including the Trustee's own material and affidavits, a 50/50 split seems right; but of course, consistently with the non-intervention principle, we do not as such direct the Trustees to reach this conclusion, albeit they could not be criticised if they did.
37. We turn next to Property 1.
38. Property 1 is owned by the W Trust and it was acquired for D's occupation once she had left the French property. She currently lives in Property 1 with her mother, also the mother of B and C. The property was always intended for D's occupation and purchased by the Trustee of the W Trust on that basis. D has occupied it rent free pursuant to a licence agreement, and in addition the W Trust has met the costs of various utilities and, from time to time, paid for improvements to the property, as well as refunding to D money that she has spent on Property 1. All these monies were treated as gifts made during the Settlor's lifetime. We record without comment D's view that the Trustees has not discharged its responsibilities towards the property adequately.
39. The Property 1 purchase price was funded by way of a loan from a Jersey company ("Company B"), one of the Trust assets. Further sums have been borrowed from Company B over the years and the total loan amount as at 31 March 2022 according to Cox 1, including capitalised interest, is £5,017,571. Interest is currently running at 1.5% above UK base rate. The Trustees have agreed in principle to sell Property 1 to D for the sum of £2 million, having received a valuation in September 2022. The result of such a sale will be that the Trustee of the W Trust will be unable to repay the entirety of the Company B loan. The Company B write off will reduce the value of (the "V Trust") and (the "U Trust") as well as the Y Trust and adjustments have been made by the Trustees to compensate C, B and E for the resultant reduction in that value.
40. The W Trust needs to sell Property 1 even to contain the Company B loss at that level. Accordingly, if D does not proceed to buy it, the Trustees will need to evict her (and her mother) and sell the property on the open market to a third party. The Trustees have been requesting D since February 2022 to provide proof of funds, and they now take the view that an urgent decision is needed. As a result of the delay, D was served with a notice to quit on 1 February 2022 and a second notice was served on 16 January 2023, without prejudice to the first, but no eviction proceedings have yet been taken. D has claimed that the sale of Property 1 will leave her homeless; although it is hard to see how that could possibly be, given that she owns a property in ("Country 3") outright, having purchased that using monies gifted to her by her father to enable her to purchase Property 1 from the Trustee in or about 2018.
41. In her affidavit sworn in April 2023, D put forward five alternative options in this order of preference:
(a) Property 1 be gifted to her;
(b) if the costs and fees of managing the W Trust, whose only asset is Property 1, are refunded to her, that could be done without detriment to the other beneficiaries;
(c) Property 1 should be purchased by her with funds coming from the partial sale of the Country 3 sale with her sister B purchasing a share equivalent to the deficit that D would have in the purchase price;
(d) D would sell the Country 3 property through Sotheby's by auction in June 2023 which would release equity for the purchase of Property 1; and
(e) Property 1 should be appointed to her and any deficit dealt with by way of a first charge against Property 1 in favour of her siblings.
42. It is apparent to us that although D has been pressed since February 2022 to provide proof of funds for her acquisition of Property 1, she was not, even by April 2023, presenting any coherent intention to make progress with the sale of the Country 3 property which would facilitate that acquisition. The auctioneers whom she said she had instructed with a view to the sale of the Country 3 property in June were stood down, but we have seen a letter dated 31 October 2023 from Goffs Country Property Consultants in Co Kildare which confirms the company has been instructed to sell the property.
43. It is against that background that we have to consider the Trustees' decision either to sell Property 1 to D for £2 million if she comes up with proof of funds by 30 November 2023 (in argument that date was extended by three months) or commence eviction proceedings.
44. B's position in relation to Property 1 has been that the Trustees should give D sufficient time to provide proof of funds for her purchase of that property. B's understanding is that D needs to sell the Country 3 property in order to do so and has received an offer from a prospective buyer for it. She objects to the Trustees being given blessing by this Court to commence eviction proceedings against D upon the basis that her father would have been very much opposed to the idea of D being evicted from her home.
45. The skeleton arguments filed by C and E for the November hearing were silent as to what should take place with Property 1. In argument, Advocate Thomas contended for E that he was one step removed from the issue because it was not his mother living in the property. However, E did not take issue with three months or a twin track approach and would endorse that proposal. C likewise in oral argument did not tackle this part of the Trustees' proposals.
46. The sale of Property 1 is an essential step in the winding up of the Trusts and distribution of assets to the four siblings following the equalisation programme. The reality is that D's procrastination in making arrangements to complete the acquisition of Property 1 acts as a block on any timely distribution. In our judgment, it would be unreasonable for the Trustees not to recognise this and indeed their steps plan and their decisions which they seek to have blessed do recognise that principle. Our difficulty is that it does not seem to us that the mere provision by D of proof of funds will provide any certainty that the sale of Property 1 to her will go ahead. If the Court were in the position of the Trustees, it would take the approach that if D was not able to complete the purchase of Property 1 by the end of February 2024, the eviction proceedings would be taken and the property placed on the market forthwith. D has in our judgment had more than enough time to take the necessary action, and her failure to do so gives one no confidence that she will make any effort in this regard in the future unless put under pressure to do so.
47. However, the principle of non-intervention suggests that the Court should not give this direction to the Trustees. Accordingly, we bless the decision of the Trustees to give D until the end of February to come up with proof of funds for her purchase of Property 1, failing which eviction proceedings should be taken. We add however that it does not seem to us at all unreasonable, even if D does come up with proof of funds by the end of February, for the Trustees to insist upon a completion of the sale of Property 1 to her within the following six weeks.
48. We also take the view that if D does not come up with proof of funds by 29 February 2024, with eviction proceedings then to be taken, the Trustees should also forthwith place Property 1 on the open market for sale. D's activity or lack of it is holding up the process for each of her siblings. The fact that the Trustees have placed the property on the open market does not mean of course that the Trustees cannot still sell the property to D if, after that date, she is in a position to buy it. We add that, on the face of it, if D's offer at £2 million is less than any offer received from a third party on the open market, the Trustees would be expected either to take the better offer unless all the adult beneficiaries agree and would be prepared to back that agreement with an appropriate indemnity or to proceed with the sale to D and make a further adjustment to the amount of her benefit to reflect the difference between the sale price to her and the sale price foregone by not proceeding with the better offer.
49. For the avoidance of doubt, the fact that D lives in Property 1 with her mother does not in our judgment affect the position. If D has to be evicted, and naturally her mother too would have to be evicted, there is nothing preventing the two of them from living in other accommodation. We do not see the mother's position as material to the issues involved unless all the adult beneficiaries agree that it should be.
50. There is one further matter which arises in relation to the W Trust. In the Distribution Plan, the Trustees have allocated as a benefit for D already received, the sum of £173,367 being the Trustees' administration costs in respect of the W Trust since the Settlor's death, D being the only person to benefit from that Trust. In the skeleton argument and before us, Advocate Mistry agreed that the W Trust was for D's sole benefit, but he contended that there should have been some communication between the Trustees and D to warn her that these costs would be attributable to her at the end of the day. The question of quantum of costs generally is a matter to which we will come shortly and his submission was that the same approach should be taken to the £173,000 as is taken with all the other costs.
51. Advocate Mistry also contended that there was no contractual basis to charge D with the costs in question. That latter submission is not one which finds any favour with us. The Trustees are entitled to their Alhamrani indemnity in respect of costs and to take those costs from the Trust fund, subject to those costs being properly incurred and reasonable in amount. They do not need a contract with the beneficiary for the Trustees to have the advantage of that indemnity.
52. In our judgment the principle of charging D with a benefit equivalent to the costs for administering the W Trust since the death of the Settlor is entirely within the reasonable band of trustee decisions. As to the quantum of costs so charged, that is a different matter and we agree with Advocate Mistry that the quantum of the charge for costs in relation to the W Trust should be assessed in the same way as the quantum of costs for the remaining trusts, a matter to which we now turn.
53. The Distribution Plan shows a total distributable value of approximately £44 million, but it appears from the skeleton argument filed by the Trustees that their administration and legal fees to 30 June 2023 have all been taken from the Trust funds; and we have assumed that they have continued to take those fees and expenses from the Trust funds subsequently. Whether the amount available for distribution is greater or less than the sum of £44 million will therefore depend upon the extent to which any challenge to the Trustees' fees and expenses is legitimated.
54. As we understand it, the Settlor approved the Trustees' fees until December 2020 when he died. There may be some contention as to whether he had capacity to approve those bills in the last years of his life. As we understand it, no beneficiary has approved the Trustees' fees and expenses since. The fact that the Settlor may have approved the bills to the date of death does not in our judgment prohibit any challenge to those fees by any of the beneficiaries subsequently, although it is not apparent that there is any appetite on their part to take that step, at least at the moment. In this judgment we concern ourselves only with the fees and expenses incurred since the date of the Settlor's death.
55. The costs of the equalisation exercise have been summarised as follows:
|
|
Fees and Expenses to 31 January 2023 |
Fees and Expenses to 30 June 2023
|
|
Trustees' fees
|
£575,211 |
£1,012,454 |
|
Collas Crill
|
£733,100 |
£1,661,168 |
|
Foreign tax and legal advice
|
£33,865 |
£157,480 |
|
TOTAL |
£1,342,176 |
£2,831,102
|
56. It is clear from these figures that quite considerable sums are involved and also that more fees and expenses were incurred in the five months between February and the end of June 2023 than in the preceding thirteen months. It is also to be noted that the figures shown above do not include costs after 30 June 2023, nor costs for the November hearing; and we can anticipate therefore that the costs have been considerably increased.
57. Given the overall numbers involved, the beneficiaries have requested that the Trustees prepare a costs budget for implementing the steps plan. We did not hear Advocate Santos-Costa disagree with that proposal, and we think it is necessary. We accordingly direct that the Trustees provide such a budget, in sufficient detail that it tackles at least in broad terms the individual expenses likely to be involved in implementing the steps plan, including a budget for the eviction proceedings, should that step be necessary.
58. Finally under this section, we recognise that we will need to deal with costs orders in relation to the May hearing and the November hearing.
59. The dispute is therefore over the quantum of costs incurred with W Trust, which should be debited as a benefit for D (dealt with above); and also the quantum of costs associated with the equalisation programme; and the costs of and incidental to the applications to Court.
60. D has made it clear that even if the costs for the administration of W Trust are to be treated as a benefit for her, she nonetheless challenges the total of those costs. In our judgment, the process adopted for the equalisations costs can similarly be adopted for the quantum of the W Trust costs.
61. The skeleton argument filed by the Trustees sets out at paragraph (130)(e) that the Court is asked to order that the Trustees' costs be paid from the assets of the ("T Trusts") on the trustee basis, to be taxed if not agreed. That prayer for relief recognises that the costs incurred are a material part of the 2022 Equalisation and Distribution Plan. We think that it is surprising that, given that the Trustees seek to allocate the costs of administering the W Trust as a benefit against D alone, they have not seemingly considered whether to allocate other costs identifiable with a particular beneficiary as a benefit to that beneficiary. As far as the French write off is concerned, the debate about how to allocate the loss is clearly a debate which affects all four siblings and it seems to us to be right that those costs are not allocated only to D and C, whatever the right quantum might be. Indeed generally, it might be thought that the costs incurred, assuming them to be reasonably incurred and proper in amount, ought to be split between the four siblings, other than in relation to the W Trust and, potentially, other than as to the costs which are specifically incurred in designing an appropriate arrangement for E to receive his share of the distribution proceeds. It could be argued that those costs are specifically attributable to him; but it could also be argued that they are incurred as a necessary concomitant of winding up the T Trusts and therefore should be split four ways. That point could be argued both ways, and the Trustees need to form a view as to which is the right way to resolve the issue. In our judgment, it is unlikely that any such decision by the Trustees in that respect would fall outside the band of reasonable trustee decisions, because either case is prima facie reasonable.
62. As Advocate Santos-Costa submits, the starting point is Article 26 of the Trusts (Jersey) Law 1984 (the "Trusts Law") as amended which is in these terms:
63. Article 26(2) has been considered both by this Court and by the Court of Appeal on a number of occasions. From the starting point that the professional trustee is entitled as a general rule to full reimbursement from the trust fund in respect of costs reasonably incurred, there is the derogation that where a trustee behaves unreasonably, he may be denied recourse to that indemnity - see Re The Y Trust [2011] JRC 155A, Piedmont [2016] (1) JLR 14, Hawksford [2019] JRC 072 and Erinvale [2021] JRC 021; and more latterly, Appledore [2023] JRC 156.
64. In MacKinnon v MacKinnon [2010] JLR 508, Beloff JA said at paragraph [42]:
65. The following propositions were specifically set out later in Beloff JA's judgment in MacKinnon at paragraph [33]:
66. The conclusion of Sir Philip Bailhache, Commissioner, that the executor must be shown to have 'crossed the threshold of reasonably justifiable behaviour' before a costs order should be made against him was said by the Court of Appeal to capture well the appropriate principle. In that context, negligence and unreasonableness are not two sides of the same coin, although they may on occasion overlap.
67. In Erinvale, at paragraph [28], Clyde-Smith, Commissioner, dealing with the assertion that the trustee in that case had acted unreasonably said this:
68. In many of the cases, the Courts have referred to the possibility that the Court might be more inclined to exercise its discretion to award costs more leniently in cases where the executor or trustee was a lay person rather than a professional trustee who could be expected to be aware of his fiduciary duties.
69. All four siblings take the view that the costs which have been incurred, both in the context of the Trustees' administration fees and in the context of the professional fees it has incurred with Messrs Collas Crill, are unreasonable in amount.
70. D has instructed Mr Jim Diamond, a costs lawyer, who prepared a report for her following the May hearing. The report highlights the number of fee earners employed by the Trustees working on the W Trust - forty in all for the period from April 2021 until July 2023. Concerns have also been expressed by Mr Diamond in relation to a move by the Trustees from billing in terms of six minutes units to billing by ten minutes units. Mr Diamond made some brief comments on the work in progress reports supplied as follows:
(a) a forty member team would almost certainly lead to duplication of work;
(b) many of the work in progress reports contain work charged under the narrative 'general filing'. There was a possible question as to whether this was appropriate fee earner work;
(c) almost all the reports contained work charged under the narrative 'Billing and JXT narrative'. In Mr Diamond's view this was not fee earner work and should not have been charged;
(d) there are various issues of fee earners doing work at too high a level and / or the work claimed for doing non-fee earner work - thus for example, a director charged for two units (£88.33) for 'arranging teams meetings with Wilsons'; and
(e) charges had been made for Know Your Customer which was thought to be out of all proportion to what was appropriate. In addition, there was a claim for an 'intro call' with D of 1.2 hours at a charge of £599.69. Mr Diamond considered that would not be chargeable to the client.
71. E instructed RLH Legal Costs Consultancy to carry out a similar exercise. Ms Rachel Hall of that firm wrote to Advocate Thomas on 15 November 2023 with an initial report. Her general observations however were that the costs incurred were disproportionate to the overall value and duration of the matter in hand. More than nine thousand hours had been claimed for work undertaken, which shows significant duplication both in-house and between the parties. Messrs Collas Crill had involved thirty-six fee earners over the 31 month period and Ocorian employees totalled fifty-nine fee earners, which she found to be extraordinary. Unsurprisingly, given the number of fee earners, there was the question of cross-party duplication where for every entry within the Collas Crill timeline, a duplicate attendance was triggered by the responding Ocorian fee earner. Ms Hall came up with other criticisms as well - clerical work performed by senior fee earners which should ordinarily have been delegated to support staff, over-representation at Court with three Jersey advocates, an English solicitor and two directors from Ocorian; and a number of discrepancies in reconciling invoices against the time claimed. In her view, a full analysis of the timelines would take in the region of two hundred and fifty to three hundred hours to prepare, and the review by the instructing advocates and client to finalise the report would take around four further weeks given the volume of discrepancies. If the matter proceeded to taxation, she estimated the costs would be in the region of £60,000.
72. This Court will not engage in a detailed review of quantum in the current proceedings and would generally approve the making of an order for the trustee to recover its internal administrative costs and its expenses pursuant to Article 26(2) of the Trusts Law and under the Court's own inherent jurisdiction. As set out in Alhamrani, there is a threshold before the Court will direct a more detailed enquiry into quantum. In our judgment, that threshold is clearly passed in this case and accordingly we do not consider that we would be in a position to bless without further enquiry the Distribution Plan, which appears to have taken account of fees and expense charged, in the sense that the distributable funds have been reduced by the fees and expenses taken by the Trustees.
73. The more difficult question is how that inquiry is carried out. Various options have been floated by the parties, including a reference to the Judicial Greffier, arbitration and mediation.
74. In our view, in the absence of agreement to arbitrate, this is a question which, by virtue of the sums involved, should ultimately remain within the overall supervision of the Royal Court. For that reason, we consider that the internal administration costs of the Trustees and the fees and expenses paid to outside lawyers and other professional advisers should be referred to the Judicial Greffier for taxation on the trustee basis, namely whether those internal costs and fees have been reasonably and properly incurred. However, the exercise of taxation of bills of this magnitude will be a substantial one and we are only too conscious that the Judicial Greffier Substitute will almost certainly not be able to give sufficient time to this one case, given all his other outstanding obligations, without there being a considerable delay which none of the parties would want to see. For that reason, we canvassed with the parties that it might be appropriate for an external costs expert to be appointed as a Greffier Substitute, if the Bailiff so agrees, at the cost of the T Trusts, with a view to settling the appropriate figure for both administrative fees and expenses. All parties seemed to accept that was a pragmatic way forward and we so direct. By following that course of action, the decision of the Greffier Substitute would ultimately be subject to review by the Royal Court if any party wished to contest the outcome. The Greffier Substitute will take into account the costs orders made by the Court as set out below in the assessment of both the Trustees' internal costs and their expenses.
75. We invite the parties to agree terms of reference for the Greffier Substitute, based on Alhamrani and taking into account the need to consider the grounds of criticism detailed in the reports of Mr Diamond and Ms Hall, which should be submitted to us for approval on the papers. Clearly the Greffier Substitute will have the ability to award the costs of the taxation exercise, albeit his or her own costs will be met out of the T Trusts.
76. We now move on from the question of quantum to the question of costs orders in relation to the November and May hearings.
77. In the usual course of events, the costs incurred in blessing applications of this kind would normally be borne by the trusts in question, the trustee having its costs on the Alhamrani basis, and the beneficiaries convened to the application having their costs under an order of the Court on Re Buckton principles [Re Buckton [1907] 2 Ch 406. However, it is always open to the Court to make some other order, and the questions which arise here are:
(i) Given that the Trustees have not been successful in either the May or the November hearings whether they should not have their costs on the Alhamrani basis in respect of either or both of those hearings; and
(ii) Whether on the same basis, the Trustees should personally be required to pay all or any of the costs incurred by any of the beneficiaries of and incidental to either or both of those hearings.
78. There were three obvious and immediate difficulties with the application brought to Court in May for a blessing of what was then called the final distribution plan. First of all, the figures which underlay the plan were extremely difficult to follow. Counsel had that difficulty, as did the Court. It is quite unlikely that, if all other objections had fallen away, the Court would have felt comfortable in blessing the final distribution plan on that basis.
79. Secondly, C was in possession of the estate assets and was not prepared to complete her administration of the estate by transferring those assets to the Trustees, as trustees of the Y Trust, which was the residuary beneficiary under the Settlor's will, because her siblings had not all agreed to give her an indemnity in relation to her work as executrix in the administration of the estate. About half a day of the hearing in May was taken up with investigating the impediments to the giving of this indemnity, because no distribution plan could be put into effect until the estate was finally administered and the assets transferred.
80. Thirdly, there was the problem over the French write off, with the Trustees proposing a split of the French write off equally between the four siblings, a course to which B objected. Here the Court considered that the plan could not possibly be approved as it was unfair to both B and E in that respect.
81. Clearly the Trustees could not be responsible for the failure to conclude the administration of the estate; but it could be said that they did hold responsibility for proposing the final distribution plan which was wrongly drawn in respect of the French write off and in any event was unclear on the figures.
82. As is clear from this judgment, the Distribution Plan proposed by the Trustees in the November hearing has been largely agreed between the parties. The only points of difference are the French write off (again), the allocation of costs to D in respect of the administration of the W Trust, and the question of costs.
83. On 6 December 2023 the Court arranged for a draft judgment, substantially in the terms set out above and in paragraphs [85] to [92] and [101] to [103] below to the parties in the usual way inviting comments. C responded with a claim for costs. On our instruction, she was advised in these terms:
84. Written submissions have been made by all parties and these have been considered by the Commissioner, whose discretion it is to make costs orders.
85. In reaching a conclusion as to what costs orders ought to be made in respect of the costs of and incidental to the application in May and the application in November, we disregard entirely the dispute over quantum. We do not know how that will be resolved and it is irrelevant to the decision as to whether, in principle, any order should be made against the Trustees in respect of the costs of those applications.
86. We note that we are not concerned in this respect with the equalisation exercise as a whole, of which the French write off forms a part, but only the costs of and incidental to the hearings in May and November.
87. The argument for the beneficiaries that some order should be made against the Trustees is premised, so it seems to us, on these factors:
(i) while a blessing application could be anticipated in respect of the eventual plan to distribute the Trust funds, two such applications - now perhaps three - could not. As Advocate Thomas put it, a blessing application is not a playground for trustees. Applications of this kind are significant because the consequence of a court blessing is that the trustees are in practice released from any claims by beneficiaries from performing the acts blessed, unless there has been some chicanery on their part in securing the blessing. Inevitably, beneficiaries convened to such applications will want to consider very carefully what is proposed, and will likely incur costs in doing so;
(ii) the application in May was premature because the estate had not been distributed. It would therefore have failed anyway, not least because the Court would not have been comfortable with blessing an arrangement that was so clearly conditional on the happening of an event which might not have occurred for months at which time the overall position might have been different;
(iii) at its heart, the problem over the duplication of costs arises with the Trustees' approach to the French write off, and, as is apparent from the present judgment, it is a continuing problem; and
(iv) the fact is that the siblings have had to appear twice and have had to prepare skeleton arguments and affidavits at least twice.
88. The arguments on the other side are these:
(i) the May hearing did have the result that the parties were placed under some pressure to come forward with a solution to unblock the distribution of the estate. It is at least arguable that the Trustees should have no responsibility therefore for a part of that hearing;
(ii) some of the arguments run by the siblings, particularly D, have failed albeit some have been successful; and
(iii) the argument over the quantum of costs was as much irrelevant to the outcome in May as it was later in November and it therefore falls to be disregarded.
(iv) Furthermore, we accept the submission made by Advocate Santos-Costa that there was a good deal of work involved in the preparation for the hearing in May which has been used again in November, and which would have been necessary in any event whether or not the Trustees sought a blessing of the proposals.
89. In our judgment, the fair conclusion is that the Trustees should have 50% of their management costs and legal fees incurred of and incidental to the hearing in May payable out of the T Trusts on the Alhamrani basis; and should have no claim for the balance of 50% which they will have to forgo and / or meet themselves respectively.
90. Although there is no obligation on us to impose a double penalty, we also think that the consequence of putting the beneficiaries through a wasted exercise in May is such that we should condemn the Trustees to pay personally 50% of the costs of and incidental to the May hearing incurred by each of B, C, D and E. In respect of the costs of all the siblings, the order does not include the costs related to the equalisation plan as a whole, but only those of and incidental directly to the final distribution plan which was the subject of the application in May.
91. The governing reasons for our decision on costs are these. First of all, we consider that the arrangements which led to the need for equalisation should have been capable of proper documentation removing the scope for much of the argument, and the responsibility for the preparation of that documentation lay with the Trustees. Secondly, we accept the premise that a higher standard is required of a professional trustee than of a lay trustee, and the way in which the figures were prepared and presented for the May hearing was in some respects significantly unhelpful. Thirdly, the fact is that the Court has now concluded twice that the treatment of the French write off in the Trustees' proposals was irrational. The fact that on the first occasion there was close questioning by the Court of all the parties should have made the Trustees more than aware of what the issues were.
92. These reasons are weighed in the balance against the need to avoid trustees being disinclined to apply to the Court for a blessing of substantial decisions which are crucial to the trust administration; and in particular it follows from that point that there is a recognition that orders routinely made against trustees who do not have their applications blessed could act as a disincentive in the future. That is far from this Court's intention and our decision is based on the particular facts of this case.
93. In her written submissions, C asks us to order that the costs of the French write off should be taken separately from other costs, and that the Trustees should a) reimburse her personally on the indemnity basis for all these and b) have no claim in excess of 20% of their management and legal costs on that issue. She also seeks an order against the Trustees for 80% of her costs of the November hearing. Her claim is based on her submission that she won the French property issue hands down, and that the point should never have been litigated. The Trustees have been found by the Court to be obviously wrong on two occasions and her position has been set out in detail in her March affidavit and has not materially changed or been challenged. She complains that the Trustees have been prejudiced in favour of D and that the French write off has been the only matter on which she has litigated and thus all or nearly all her costs have been incurred in this regard. B and E agree with this approach. D broadly accepts the Court's approach to the costs of the May hearing, but goes on to submit that the November hearing was entirely the result of a failure of the Trustees to address the issues appropriately and it is wrong to land the beneficiaries with more costs in respect of future hearings. She invites the Court to make the same order in respect of the November hearing as made in respect of the May hearing. She also asserts that the Court should order the Trustees to pay the costs of the hearing in October 2022, where the Trustees failed in their efforts to have the vesting date extended because they had not requested the Court to convene all relevant beneficiaries.
94. The Trustees accept the draft order on costs and do not consider it just that any more punitive order should be made. They consider that many of the costs incurred by C and her siblings in relation to the November hearing will be covered by the proposed order in relation to the May hearing; that it is inappropriate to carve out the French write off because that was relevant to Country 1 forced heirship rights which the Trustees had to take into consideration even if the parties did not; and that in any event, in relation to the November hearing, the Distribution Plan was substantially approved and this resulted in the partial blessing. Much of the work undertaken by the Trustees for the November hearing was essential to the 2022 Equalisation. The Trustees assert that they were asked for a considerable amount of information and documents, some of which was difficult to provide given Ocorian's acquisition of the business of Estera, the previous trustees and the associated switch in electronic systems, the nature of document retention during the relevant time period and the short time frame available.
95. We accept that in theory it is open to the Court to make an order on an issues basis, but in our judgment the interrelationship of the issues, in particular having regard to the estate and forced heirship issues, is such that we should not do so. In any event, there is something to be said for the Trustees assertion that many of C's costs will have been incurred in relation to the May hearing and will be covered by the proposed orders in any event.
96. We are unimpressed with the submission that the disclosure exercise was difficult because of the change in trustee and incompatibility of electronic systems. Any additional cost in that respect is not one which one should reasonably be borne by the beneficiaries.
97. Having regard to all the considerations set out above and despite the submissions recently received, we consider that our provisional order in respect of the May hearing is not unfair and that it is appropriate. Accordingly we make the orders set out at [89] and [90] above.
98. Dealing next with the October 2022 hearing, we note that the costs of the Trustees and the Guardian have already been provided for by the Act of Court of 9 December 2022. We order that the First to Fourth Respondents should bear their own costs of and incidental to that hearing. Such an order ensures that the individuals concerned do not find themselves picking up the costs of their siblings.
99. As for the costs of the November hearing, we accept that these have been incurred needlessly in the sense that the proposed actions of the Trustees still have not been blessed in their entirety. We accept that C has been successful in her objections to the handling of the French write off and that this issue was her primary focus at that hearing, but also that much of her exposure to costs will have been covered by the order for the costs of the May hearing. We accept that E has been delayed in seeing any part of his inheritance, whereas his siblings have had substantial distributions. We note that further costs are likely to be incurred in relation to the assessment of the reasonableness of the Trustees' costs, both internal and legal, as well as the likelihood of a further hearing. Nonetheless we also accept that much of the work necessary for this hearing would have been necessary anyway, and the legal costs all parties have incurred would to that extent have been incurred reasonably. The partial blessing means that it is work which has not been wasted.
100. Having regard to all these considerations, and in particular to the failure of the Trustees to pick up the directional steers given at the May hearing and their own several volte face over the treatment of the French write off, we consider that the beneficiaries should not have to pick up responsibility for all the Trustees' costs for the November hearing. We think it would be unjust for the Respondents to see their share of the trust distribution reduced by the full amount of the costs which are found to have been reasonably incurred by the Trustees when quantum is assessed. Accordingly, we order that the Trustees should have only 75% of their reasonable management and legal costs out of the Trusts in respect of the costs incurred of and incidental to the November hearing. However, we do not consider that any order should be made against the Trustees for the costs of the Respondents. Accordingly, we order that they should bear their own costs of and incidental to that hearing.
101. Finally, we refer to the costs incurred by Advocate Renouf, the guardian ad litem. We order that he should have his costs on the indemnity basis out of the Y Trust, as that seems to be the most liquid and also the trust in which the first four Defendants will all share. The guardian's costs are a first call on the assets of that trust. If there is any difficulty in this connection, there is liberty to apply.
102. It was clear in the application before us that for the most part the Distribution Plan was accepted by the four siblings. The tinkering which is necessary is relatively minor. Accordingly, subject to the resolution of these outstanding items, the Distribution and steps Plans are approved, and the parties will not have to revisit them.
103. In this respect, we wish to add a few comments about D's position. It was clear from the submissions made that there is some idea that D faces possible bankruptcy. Advocate Santos Costa told us in relation to the allocation of the French write off that " If [C] were correct, this would bankrupt her sister completely." He went on to say this was not the reason the Trustees reached the view they did. Other references, whether direct or oblique, to this possibility were also made by others.
104. Like all her siblings, D's share under the Distribution Plan is approximately £10.374 million. Taking account of all the benefits she has received so far, and allowing for 50% (for the sake of argument) of the French write-off, she will still receive a distribution of just under £1.5 million. In addition, she owns the Country 3 property. She is not and will not be bankrupt. Of course, it is true that she may now have less than her siblings. However, variations in the wealth of the four siblings, years after these arrangements were first made, merely reflect the different ways in which the assets have been spent in the interim. The Settlor made his wishes clear that the four children were to be treated equally and that is the priority. Neither the Trustees nor the Court can carry any responsibility for how the beneficiaries have spent or will spend what amounts to their inheritance.
